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Where High-Growth Founders Go: The Answers May Surprise You

Kate Maxwell is a research analyst at the Ewing Marion Kauffman Foundation and co-author of “The Ascent of America’s High-Growth Companies: Founder Mobility.” To read the entire research series on the geographic trends of these companies and to view interactive maps, visit www.kauffman.org/inc500.

The United States is a historically mobile country. From the earliest days of the pioneers, to famed adventures of Huckleberry Finn, movement is a cultural and economic hallmark of the United States and integral to its success. Movement of human capital enhances efficiency while flux creates an exchange of ideas.

Across the country, cities vie for this free flowing human capital to locate in their area. As entrepreneurship has become more widely credited for economic success and development, cities specifically wish to attract promising entrepreneurs. The founders of firms that make Inc. magazine’s list of the 500 fastest-growing firms each year are exactly the sort of talent that cities compete so fiercely to attract. However, to this point, there has been little formal investigation that even describes the movements of these founders. The typical narrative is that high-growth founders are educated in Ivy League schools and then flock to Silicon Valley to start high-tech companies.

Washington, D.C., for example, stood out on multiple indicators – there were more Inc. 500 companies founded in D.C. during this period than in Boston, San Francisco, Los Angeles and New York. Yet D.C. isn’t typically considered a traditional entrepreneurial hub. Washington D.C. also educated and retained quite a few founders – making the top 10 list in each indicator. Using the Inc. data, our research notes the importance of government services and provisions in high-growth businesses over the past 35 years, which accounts for some of the prominence of D.C. in the mobility analysis. And, while information technology is disproportionately represented among Inc. 500 companies, these high-growth firms also operate across a wide spectrum of sectors.

Even more surprising is the presence of Provo, Utah. Provo is in the top 10 of cities that educated the most founders, retained the most founders, and retained the highest percentage of founders. The Provo-Orem metropolitan statistical area is about 46 miles south of Salt Lake City, and it makes the top 10 list for cities that educated and retained the most Inc. 500 founders. When the lists are adjusted for population, the Provo-Orem area is second only to New York in the list of highest numbers of founders. This is probably due to the presence of Brigham Young University, Utah’s business friendliness, and the close knit nature of the Church of Latter Day Saints population, which likely draws founders back to the area to start their companies. Most young men and some women in the LDS Church partake in a two-year missionary service, part of the purpose of which is to spread their faith. One can easily argue that such an experience effectively educates these young people on salesmanship – an underemphasized but important aspect of entrepreneurship and business education.

Finally, Atlanta, another city not particularly well known for startup culture, beat out San Francisco in the number of companies founded there and attracted more founders than Boston and the same number as New York and San Francisco. Generally speaking, the South as a region did exceptionally well, with Atlanta acting as a magnet for the surrounding region – more than half of the founders it attracted were educated in another Southern MSA. It probably wouldn’t surprise most Americans that the same region educates the most Inc. 500 founders and hosts the most companies – it may surprise them, however, to learn that it’s the South (we used the Census Bureau regional definition so the South includes both D.C. and Texas, but even when they are excluded the South performs well). Richard Florida has pointed out that startup culture is spreading and our conceptions of which regions do what well are becoming outdated, a premise our analysis supports.

These trends remind us that high-growth entrepreneurship and the human capital that drives it isn’t monopolized by any one region, city or coast. Indeed, it’s widely dispersed across the United States and it moves – quite a bit. The United States is still a mobile nation. Seventy-five percent of founders started their companies in a different metropolitan statistical area than the one where they were last educated, contributing to the sort of movement that has long benefited the U.S. economy.

We now know that the narrative we commonly associate with these founders is incomplete and that reality of their movements is complex. They hail from cities like Washington, D.C., and Provo, and they start their companies in every region of the country. Yet, we still have much to learn about how and why founders choose to move the way they do. Doing so will allow us to better understand our entrepreneurial ecosystems and add another chapter to the great story of American migration.

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